Homeowners insurance covers damages to your home and other buildings on your property. Personal property is also protected anywhere in the world under your homeowner’s policy. Even if your luggage is stolen while on vacation, you are covered. However, there are some policy limits for jewelry, furs, silverware, computers, watches, firearms, art, and rugs or carpets made outside the United States. Your insurance agent can advise you on adequate coverage for your valuables.
To ensure you are compensated for personal belongings, you should inventory all of your personal belongings. Your inventory should list each item, its value, and serial number. Keep receipts for major items in a fireproof place. Photograph or videotape each room, including closets, open drawers, storage buildings and garage. Review the inventory with your agent to decide the coverage you need.
Typically, your personal property is covered for damages resulting from theft, fire or lightning, windstorm or hail, explosions, riots or civil commotion, falling objects, aircraft and vehicle damage to your home, sudden or accidental smoke damage, vandalism or malicious mischief, sudden or accidental discharge of water or steam from plumbing or appliances, building collapses, and personal liability. If your home, apartment or condominium becomes uninhabitable due to fire, burst pipes or other reasons covered by your policy, your insurance will cover “additional living expenses,” generally meaning that you are paid to live somewhere else.
Renters face a somewhat different set of circumstances regarding their residence.
Landlords insure the physical building against damage from occurrences such as fire, hail, and vandalism. But landlord insurance does not cover your belongings. The rental insurance you carry covers damage to or loss of personal property when you rent an apartment, townhouse or condominium. Rental insurance also can protect against liability lawsuits or medical bills of guests injured in your apartment, or against accidents caused by other tenants. It also may cover personal property stolen from your car.
There are several types of residential insurance policies. For example, the HO-4 policy is designed for renters, while the HO-6 policy is for condominium owners. There are two kinds of payouts from rental insurance: actual cash value (which pays you the amount it would cost to replace your lost or damaged property minus the depreciated value) and replacement cost coverage (which pays for replacement of your lost or damaged property).
If you bought a television set for $500 five years ago, the actual cash value will be significantly less today because your insurance company will pay only for what the old set was worth today, minus your deductible. Replacement cost coverage, on the other hand, will pay what it actually costs to replace the lost item, minus the deductible, although the policy usually costs more.